C-56 Combating Counterfeit Products Act gets Second Reading in House

On Friday, Christian Paradis Minister of Industry and Minister of State (Agriculture) moved that Bill C-56, The Combating Counterfeit Products Act be read the second time and referred to a committee. The Bill is a long overdue attempt to bring Canada’s laws related to combating counterfeiting to international standards.

Kellie Leitch Parliamentary Secretary to the Minister of Human Resources and Skills Development and to the Minister of Labour rose in the House to describe the reasons for the Bill and its scope. Here, in part, is what she said about Bill C-56.

Last year our government welcomed the final passage and coming into force of the Copyright Modernization Act, which gave new rights and new tools for copyright owners and users, giving them the certainty and tools they need to fully engage in the online world. As part of the overall balance of the bill, the copyright modernization act introduced specific provisions to deal with the issue of online piracy.

With the combating counterfeit products act, we would be taking the next step in putting in place the legislative changes that are needed to deal with counterfeiting and piracy in the physical marketplace and at our borders. This bill would protect Canadians from harmful counterfeit products. It would help our creative businesses and workers, and law enforcement and border officers confront the increasing threat of trademark counterfeiting and copyright piracy. It would also bring Canada’s laws in line with international standards…

It is easy to associate counterfeit goods with designer clothes, watches and so on, similar to what was being spoken about in the lobby by the member for Mississauga South earlier this evening. The reality is that counterfeit goods extend well beyond luxury goods…

Today they are more pervasive and more difficult to detect and, in this sense, much more problematic. Consumers may even unwittingly purchase a good that they assume to be legitimate, but which contains counterfeit components. We owe it hard-working Canadian families to prevent exposure to such products.

Copyright piracy is the making of illegal copies without consent of copyright holders and their subsequent commercial distribution. We know from our stakeholders, that copyright piracy is increasingly moving online.

The issue of copyright piracy in the physical marketplace is far from resolved, when we think of CDs, DVDs or software being offered for sale in stores and in other markets.

Commercial counterfeiting and piracy are growing issues in Canada and around the world. As with illicit activities, the scope of counterfeiting and piracy is difficult to track and measure.

However, this is what we do know. The RCMP investigated over 4,500 cases of IP crimes in Canada between 2005 and 2012. In 2005, the RCMP seized over $7 million worth of counterfeit and pirated goods. In 2012, this number had grown to $38 million, a fivefold increase.

Canada is not alone. Other developed countries are signalling a rise in the prevalence of counterfeit and pirated goods in the marketplace.

This increase in the value of seizures in Canada is also consistent with what we have heard from Canadian businesses. They have been telling us for years now that counterfeiting and piracy have an impact on innovation and economic growth across the country.

Over the last six years, organizations such as the Canadian Intellectual Property Council and the Canadian Anti-Counterfeiting Network have issued reports calling for legislative changes to deal with counterfeiting and piracy. Most recently, we heard the same calls from several witnesses at a study before the Standing Committee on Industry, Science and Technology.

The measures proposed in the bill are crucial if we are to keep creating high-tech jobs in the future.

Businesses have been overwhelmingly vocal in their support of the bill. For example, Mr. Kevin Spreekmeester, vice-president of global marketing at Canada Goose Inc. and co-chair of the Canadian Intellectual Property Council, said, on March 1:

Canadians have long been victims to the illicit counterfeit trade and the new measures announced today should be welcome news for consumers, businesses and retailers alike.

Mr. Jayson Myers, president and CEO of the Canadian Manufacturers & Exporters, explained that counterfeiting:

—has been a longstanding priority issue for manufacturers…[they] punish legitimate businesses. They are a drain on our economy and on jobs – and they put the health, safety and environment of every Canadian at risk…

Counterfeiting and piracy hurt our economy. However, beyond their economic impact, there are serious criminality and health and safety issues that we simply cannot overlook.

The commercial production and distribution of counterfeit and pirated goods has been associated with organized crime. This is just another line of business for them and it may help them fund other types of activities, such as drug smuggling and illegal firearm sales.

As for health and safety, there are numerous examples of counterfeit goods that could expose Canadians to danger. Think of the counterfeit batteries or car parts, medicines or baby food.

In 2005, 11% of counterfeiting and piracy cases examined by the RCMP involved harmful products. In 2012, this number grew to 30%.

I would also like to take a moment to speak about one of the particular issues that illustrates the growing threat posed by these goods.

In July 2012, Canada Border Services Agency officers referred a shipment to the RCMP for investigation. This shipment contained 476 counterfeit wheel bearings, with a commercial value of $45,000, which were to be used by the Canadian mining industry.

What this illustrates is the fact that these goods have not been subjected to Canadian safety standards and may cause harm as a result. Who knows whether these pieces of equipment would have actually functioned to the standard of levels that we expect in Canadian equipment.

With the new provisions in this bill, we will start to get a fuller picture of the threat that commercial counterfeiting and piracy pose to the Canadian economy and to address it within Canada and at its borders.

Now that I have described the scope of this issue and the very tangible consequences of counterfeiting and piracy for businesses, consumers and the economy, let me turn to a description of the key elements of Bill C-56, the combating counterfeit products act, and of how this bill would help in the fight against commercial counterfeiting and piracy.

To confront this, we must give new authorities to border officers to enable them to act when they encounter commercial counterfeit or pirated goods at the border. We must also give rights holders the tools they need to stop counterfeiting and piracy before these illegal goods can enter the Canadian market and undermine their brand and their work. Third, we must give law enforcement the tools it needs to pursue those who gain commercially from this illegal activity.

With respect to the bill itself, let me expand. First, the bill would strengthen Canada’s intellectual property rights enforcement regime at the border. Currently, border officers are not allowed to search for and detain counterfeit and pirated goods without a court order obtained by the trademark or copyright owner, which has proven to be onerous for businesses overall.

Bill C-56 introduces a process that would allow rights holders to submit to the CBSA a request for assistance, which would enable border officers to share information with rights holders regarding suspect commercial shipments.

The request for assistance would allow rights holders to record details about their trademark or copyright at the border, and to provide contact information. It would also contain practical information about how to identify legitimate versus counterfeit or pirated goods. The request for assistance would be an effective tool to enable rights holders to defend their private rights in civil court.

Let me be clear. Bill C-56 would not allow border officers to seize goods for copyright or trademark infringement. It would provide the authority for border officers to temporarily detain goods suspected of being counterfeit or pirated, and then provide limited information to rights holders regarding those detained goods.

This information could only be used to determined if the goods were counterfeit or pirated, or to assist the rights holders in pursuing remedies in the courts. The courts would remain the only competent authority to determine whether goods detained at the border infringed intellectual property rights and to apply appropriate remedies.

The bill would also amend the Trade-marks Act and the Copyright Act to allow border officers to temporarily detain shipments suspected of containing commercial counterfeit and pirated goods. Border officers would be able to act either following a request for assistance or on their own initiative.

With these new measures at the border, we would only target commercial counterfeiting and piracy. There would be a personal use exemption, which means we would not be searching individual travellers possessing personal use quantities.

The bill would provide a specific exception at the border for individual consumers importing goods intended for personal use, as part of their personal baggage.

Goods that were made legitimately in the country where they were produced would be excluded from the new border measures.

With this bill, we would send a clear message. We understand the threats that counterfeiting and piracy represent for our businesses, for the economy and for the health and safety of Canadians, and we are acting accordingly.

Our government has been clear. Our focus remains on jobs, growth and long-term prosperity for Canadians. Counterfeiting and piracy directly threaten each of these. With the provisions in the combating counterfeit products act, our government would be taking action to curb the presence of these illegal goods in our country and at our borders.

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